Two divisions, one may be sold
Spark is
restructuring into two divisions. The company’s mobile and
broadband operations will form the backbone of its
Connectivity division, which will also include business
connectivity, managed services, IoT and security. Spark’s
Digital Services division covers the company’s cloud and
IT services.
While organisationally distinct, the two
divisions will continue to share centralised
functions.
In an announcement posted to the NZX, Spark
says the company’s board has begun a strategic review of
the Digital Services division and is now assessing ‘how to
maximise the value and returns generated by this division
for shareholders’.
Spark says there is no certainty
the review will lead to a transaction, commonly read as
leaving the door open to a sale.
Alongside the
restructure, Spark has changed its leadership team. Mark
Beder, formerly the company’s chief commercial officer, is
now the chief customer officer of the Connectivity division.
Customer director Greg Clark will take on an interim chief
customer officer, Digital Services role before departing in
December 2026.
Tommy Bjorkberg will be the new chief
operating officer from October 1, with responsibility for
network operations, business technology services and cyber
security. Leela Ashford’s role is now chief marketing and
corporate affairs officer.
Analysis: Spark’s
digital services journey comes full circle
When
Telecom New Zealand demerged Chorus in late 2011 to take
part in the Ultra-Fast Broadband (UFB) rollout, it separated
out its physical fixed-line infrastructure.
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Unshackled
from physical copper lines, incoming CEO Simon Moutter
plotted a brave new path: Telecom would no longer be a
commoditised, regulated utility telco. Rebranded as Spark in
2014, the company explicitly set out to become a digital
services business.
That journey lasted close to 15
years. Spark’s ambition to move ‘up the value stack’
into IT, streaming, consumer tech and heavy infrastructure
ownership has effectively come full circle to the core
economics of a disciplined telecommunications
utility.
The rump of Spark’s digital services
adventure remains in one of two divisions following the
latest reorganisation. Spark’s announcement on Monday (27
July 2026) to the NZX makes it clear that the Connectivity
division is the company’s core.
Beyond the
core
Spark describes the Digital Services division as
‘beyond the core’. While it says there is no certainty
the business is heading towards a transaction, the
underlying message is clear: Spark may sell the Digital
Services division.
The statement says the remaining
Connectivity division will focus on ‘consumer mobile,
broadband and business connectivity, including managed
services, collaboration, IoT and
security’.
Spark’s recent strategic moves, most
notably
selling down a 75 percent stake in its data centre division
to Pacific Equity Partners (PEP) alongside ongoing cost
reductions and refocusing on core connectivity, can all be
seen in this context.
20 years of digital
services
The Digital Services division can trace its
ancestry back to Gen-i, which it acquired in 2004. At one
time it was seen as a home-grown IT colossus that stood
alongside Datacom.
Along the way Telecom or Spark
acquired a series of cloud hosting, IT services and
consultancy businesses including CCL. Spark paid $50 million
for that business in 2015. There were names such as Revera,
Appserv, Leaven and Qrious. They all became part of a
billion-dollar operation.
Up to a point this strategy
made sense: IT services and cloud hosting are strong growth
sectors. At times Spark managed to find common ground with
the telecommunications business.
Yet IT services are a
people-heavy, low-margin business that doesn’t sit
comfortably with telecoms and does not necessarily scale
well.
While global hyperscalers were already active
when Spark set out on its path, they had not yet achieved
dominance and did not have much local presence. Spark may
have been a sizeable operation in a New Zealand context, but
it struggled to compete with AWS or Microsoft.
When
hyperscalers like AWS and Microsoft Azure invested billions
to build out massive local cloud regions in New Zealand, the
market changed permanently. Spark found itself stuck in a
middle ground: too small to compete with the endless balance
sheets of global tech giants, but carrying a cost structure
too heavy to act as a nimble, boutique IT
consultancy.
Disconnect
There was a clear
disconnect. A telecoms business generates a solid cash flow.
Building infrastructure is expensive, but once the network
is in place, carrying more traffic and lifting revenue comes
at minimal additional cost.
Professional IT services,
by contrast, scale with headcount. Every dollar of margin
requires more engineers, more project managers and there is
constant wage pressure.
There’s another mismatch.
The connectivity business accounts for around 80 percent of
Spark’s gross margin. Shareholders reasonably expected to
see capital expenditures allocated to the higher-margin
mobile operation than to the lower-margin IT business.
Meanwhile the era of historically low interest rates was
coming to an end.
These economic realities informed Spark’s
SPK-30 strategy introduced by CEO Jolie Hodson. The
priority shifted back to driving returns from mobile, 5G
investment and core network efficiency.
Selling down a
75 percent stake in its data centre business to Pacific
Equity Partners (PEP) was the first clear sign that Spark
was willing to offload heavy capital requirements to private
equity while retaining a minority share and an anchor
customer relationship.
Carving off Digital Services
into a standalone division with its own strategic review is
an extension of that process. The lower-margin,
higher-friction business unit is now neatly packaged. It
gives Spark the flexibility to negotiate a joint venture,
sell to a global IT integrator or package it for private
equity.
Separation
The separation of
Connectivity and Digital Services mirrors a process
long-term Telecom shareholders will find familiar. Before
the 2011 structural separation of Telecom and Chorus, the
business went through a government-mandated operational
separation that completed in 2008.
At that time it
carved its business into three distinct units: Access (which
became Chorus), Wholesale and Retail. Each operated at
arm’s length.
In some respects, this week’s
reorganisation announcement echoes that process. By formally
ring-fencing Digital Services from core Connectivity, Spark
is repeating its old playbook. It is creating clear,
isolated financial boundaries around two operating models
with fundamentally opposing capital demands, margin profiles
and cost structures.
The strategic review could end in
a full trade sale, a private equity joint venture or a
staged exit. Either way, the circle is complete. The
structural split that allowed Telecom to shed its identity
as a utility and re-emerge as Spark led back to a more
narrowly focused connectivity business.
ComCom
proposes scaling back MBNZ programme
As
flagged in March, the Commerce Commission is considering
scaling back its Measuring Broadband New Zealand (MBNZ)
programme. It proposes a ‘right-sized’ version that
reduces reporting requirements while maintaining independent
broadband performance information for consumers.
In
its 2026 review of the MBNZ programme, the commission notes
that the current programme has been successful but says it
is costly and needs to reflect changes in technology and the
market.
The commission plans to move from quarterly to
six-monthly reports and reduce some provider-level
comparisons. This makes sense for fibre, where performance
has become highly consistent.
In recent reports, Fibre
500 peak download speeds ranged from 497 Mbps to 521 Mbps
across providers, while Fibre Max speeds ranged from 869
Mbps to 923 Mbps.
The future programme would continue
to measure fibre, fixed wireless and satellite services. The
commission says LEO
satellite performance has improved significantly, with
peak download speeds rising from 196 Mbps to 234 Mbps over
recent reports.
Submissions close on 18 August, with a
decision on the future shape of MBNZ expected in
September.
In other
news…
Drury to house
first Chorus fibre-only exchange
Chorus brought its
first purpose-built fibre-only exchange into service this
week. The move marks a major digital infrastructure
milestone for one of New Zealand’s largest and
fastest-growing developments. It also signals fibre’s
shift from a newer network layer added to legacy copper
infrastructure to the foundation of the telecommunications
network.
Fibre-only means the exchange offers more
sustainable energy use and reduced carbon emissions. It also
means better resilience in extreme weather and has the
capacity to scale; a fibre exchange can serve a larger area
than was practical with copper technology.
Chorus
operates around another 600 exchanges across New Zealand.
These were originally built to cope with copper-based
telephone lines and updated first to handle copper-based
broadband equipment before fibre technology was
retrofitted.
Reannz joins global research cyber
defence network
New Zealand’s research and
education network provider Reannz has joined an
international cyber threat-sharing agreement that aims to
strengthen protection against attacks targeting universities
and research institutions.
A renewed memorandum brings
together national research and education networks from New
Zealand, Australia, Canada, the United Kingdom and the
United States. Members can share threat intelligence and
coordinate responses to cyber incidents.
Reannz says
joining the trusted network will help New Zealand
researchers, educators and students benefit from faster
access to global cyber security insights.
Stansfield
new Tū Ātea Network Services chief executive
Tū
Ātea Network Services has appointed Jo Stansfield as its
new chief executive. The former Fortysouth chief operating
officer will start her role at the Māori-owned
telecommunications infrastructure group in
November.
Stansfield played a key role in establishing
and scaling Fortysouth, the mobile tower company. She will
lead Tū Ātea’s Broadtech, JDA and Transworks businesses,
which provide infrastructure services across
telecommunications, broadcast, health and industrial
sectors.
Current chief executive Merv Taylor will move
into a strategic adviser role after leading the transition
to Māori ownership.
2degrees becomes New Zealand
Rugby’s telco partner
2degrees has signed a
three-year deal to become New Zealand Rugby’s official
telecommunications partner.
The partnership includes
support for women’s rugby, with 2degrees backing the Black
Ferns, Black Ferns XV, Black Ferns Sevens and New Zealand
Under 18 Girls programmes. It is the first New Zealand Rugby
commercial partnership to support the women’s pathway from
development programmes to the international
stage.
Environmental impact emerges as AI trust
concern
Almost half of New Zealanders are concerned
about the environmental impact of businesses using AI,
according to a new One NZ report.
The research found
concerns were highest among 18–24-year-olds, with 63
percent worried about AI’s environmental effects.
Electricity use was the leading concern, followed by water
consumption, electronic waste and carbon
emissions.
One NZ says sustainability is emerging
alongside privacy and transparency as a factor shaping
public trust in AI, with businesses facing growing
expectations to demonstrate responsible use in
practice.
This time last year One NZ was talking
MVNOs
One New Zealand signed a three-year
MVNO packaging deal with Australia’s Fastter. The idea
was to help brands get a new mobile operation up and running
in weeks, not months.
Five years ago
we looked back at the
history of working from home. At the time New Zealand
was between lockdowns, but working from home was a
well-established and popular option for many
employees.
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Bill Bennett has
covered New Zealand telecommunications for nearly 40 years
and was named Tuanz Journalist of the Year 2025.
Spark restructure separates digital services
from connectivity was first posted at
billbennett.co.nz.
Freelance journalist.
Auckland-based Bill Bennett writes technology and business stories that are directly relevant to New Zealand readers.
His emphasis is on telecommunications, but he also covers other aspects of technology and business. You can find his features in the New Zealand Herald and hear him regularly on RNZ Nine to Noon and the NZ Tech Podcast.
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